South Africa’s financial services conglomerate Old Mutual Plc posted a combined loss of R724 million ($39.23 million) from the sale of its businesses in Tanzania and Nigeria last year, as it restructured its operations outside South Africa to strengthen its growth plan on the continent.

Disclosures in its latest audited financial statements for 2024 show that the sale of the Tanzanian business resulted in losses of R78 million ($4.23 million), while the Nigerian unit lost R646 million ($35 million).

Consequently, the group’s return to shareholders from investments outside South Africa— Old Mutual Africa regions— fell by 23 percent to R819 million ($44.38 million) last year, driven by lower investment returns in East and West Africa and the exit from the Nigerian and Tanzanian markets during the year, the company says.

Old Mutual Holdings Plc entered into an agreement in January 2024 to sell its 60 percent shareholding in UAP Insurance Tanzania Ltd to Strategic Ventures Company Ltd.

The shares, comprising 137,400 ordinary shares and 100 percent of the preference shares, were initially owned by UAP Africa Ltd, a subsidiary of Old Mutual Holdings Plc.

Old Mutual Holdings Ltd took effective control of UAP Holdings Ltd in 2015 by acquiring 37.33 percent of the total issued ordinary shares in UAP Holdings Ltd from AfricInvest Fund II Ltd, AfricInvest Financial Sector Fund, Aureos Africa Fund Llc and Swedfund International Aktiebolag.

Old Mutual Holdings, together with Old Mutual Life Assurance Company (South Africa) Ltd, owned 60.66 percent of the issued ordinary shares of UAP Holdings.

UAP Insurance Tanzania was a short-term insurance business acquired in 2015 as part of the group’s East African growth plan.

According to the parent company, the review of its East and West African operations has allowed it to focus on markets where it believes it can achieve strong growth.

Returns on investmentIn East Africa, for instance, shareholder investment returns declined by 65 percent to R77 million ($4.17 million), largely due to the impact of currency movements on foreign-denominated assets and the disposal of the Tanzanian business.

Shareholder assets in the East Africa region consist largely of investments in property and interest-bearing assets, with the Kenyan portfolio being the largest.

In Kenya, property assets returned 7.1 percent to investors, outperforming inflation for the year due to resilient occupancy rates, while the bond portfolio returned 18.4 percent, underperforming the benchmark.

In West Africa, Old Mutual’s investment returns dropped by 67 percent to R22 million ($1.19 million) for the year due to the disposal of the Nigerian business in June 2024 and the Ghanaian cedi depreciation of 17 percent against the South African rand.

In Ghana, bonds comprise the bulk of shareholder-invested assets and returned significantly lower returns in 2024 compared to the prior year.

In addition, investment property returns were also lower than in 2023.

Last year, the Johannesburg Stock Exchange (JSE)-listed group said it would abandon its investments in government bonds as part of a strategic decision to protect its African businesses from sovereign risks and shore up its clients’ investment returns.

The group says investment in government securities is likely to trigger a sovereign crisis that will reduce its customers’ investment returns and fuel concerns over value-for-money in some portfolios.“We are reducing our exposure in long-dated government papers with elevated sovereign risk, pausing the development of guaranteed products and responsibly and systematically reducing government bond exposure in our African markets,” the group says.

In East Africa, the group’s Life APE sales decreased by 12 percent to R440 million ($23.84 million) due to lower adviser productivity and fewer corporate schemes onboarded in Kenya, coupled with a lower contribution from the corporate business in Uganda following the enforcement of the cash and carry regulations.

The group says that new business value and new business margin in East Africa were also lower than in the prior year due to changes in assumptions to better anticipate the level and allocation of expenses in the business.

Life APE is a standardised measure of the volume of new life insurance business written by the businesses in the life and savings line of businessOld Mutual’s gross written premiums in East Africa increased by one percent to R3,887 million ($210.63 million) in 2024 following good renewals in both the medical and general insurance businesses in Kenya, largely offset by the non-repeat of a large sale which occurred in the prior year in Uganda.

The net underwriting margin improved by 160 basis points to negative 1.6 percent due to lower expenses, which were partially offset by an adverse claims experience in the medical book across the region.

Old Mutual is a pan-African financial services group that offers a broad spectrum of financial solutions to retail and corporate customers across key market segments in 12 countries, including Uganda, South Sudan, Rwanda and the Democratic Republic of Congo.

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